India-US trade deal delay will not pose downside risks to FY27 growth projections; upside likely over 7.2% if deal goes through: CEA Nageswaran
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Chief Economic Advisor (CEA) V. Anantha Nageswaran ruled out downside risks to the 6.8-7.2% FY27 GDP projections made in the Economic Survey, in the event the India-US bilateral trade agreement getting further delayed or not happening this year. Nageswaran, however, said there could be upsides to the FY27 GDP growth projections in case the deal takes pace.
“I don’t think that the US deal not happening will have an impact on this 6.8% - 7.2% range. If it happens, obviously, I think it does increase the upside potential. But I don’t think a continued standoff on this matter would mean a bigger downside,” Nageswaran told Fortune India.
Unstable global financial markets a risk to India: Nageswaran
Nageswaran, however, pointed to the other risk factors to the growth projections that have been outlined in the Economic Survey. “If some of the global financial market situations become unstable and downside materialises and global risk aversion picks up, it will have an impact on the domestic sentiment. That could impact more downside risks to these numbers,” he added.
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The Economic Survey 2025-26, tabled by finance minister Nirmala Sitharaman Thursday, projected a GDP growth between 6.8% and 7.2% for 2026-27, on the back of reforms and strong macro-economic fundamentals.
"Domestic economy remains on a stable footing. Inflation has moderated to historically low levels, although some firming is expected to occur going forward. Balance sheets across households, firms and banks are healthier, and public investment continues to support activity. Consumption demand remains resilient, and private investment intentions are improving," the Economic Survey said.
The Survey also pointed out that India’s potential growth rate in the coming years is at 7%. In the post Survey conference, Nageswaran pointed out the country’s potential growth of 7% pegged in the Economic Survey 2025-26 can even touch 7.5% or 8% in the next few years if the country checks some of the key boxes like ensuring competitiveness, addressing land issues, and export competitiveness, among others.
India becoming third largest economy depends on multiple factors: CEA
Being asked whether a 7% - 8% growth is good enough for India to become the third largest global economy by FY29, Nageswaran said it depends on multiple factors. “This is something I would not like to speculate on as it depends on multiple factors. Some of which are in our control and some of which are not in our control. We keep doing the right things which we need to do. And the outcomes will play out on their own,” he said.
“Global conditions will matter. Global conflicts will matter. There is no point speculating about this. Let us do right things. The numbers will take care of themselves,” Nageswaran added.
Private sector investment decent in FY25: CEA
On the investment by the private sector, Nageswaran said it has been “decent” in FY 25.
“The numbers will be available by the end February. But what I gather from the bottom-up data, the private sector investment in 2024-25 was quite decent in terms of the pace compared with 2023-24. So, we will have to wait and see,” Nageswaran added.
The point that I have been making in general is that with the current scenario in the world with so much uncertainty, having an overall rate of 30% of GDP is quite respectable,” Nageswaran added.